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IOB to raise another $1-billion MTN

T E Narasimhan  |  Chennai 

Indian Overseas Bank (IOB), after having successfully raised a $1-billion Medium Term Note (MTN), has planned to raise another $1 bn (Rs 5,900 crore) to boost its credit abroad.

“As the appetite for borrowing increases, we will go for another $1 billion MTN by next year,” M Narendra, chairman and managing director, told Business Standard. Time and price would depend on how the economy was improving, he added.

The proposed fund would help IOB meet the growing appetite for credit in international markets, he said. In April 2011, the bank had announced the first tranche of $500 million (around Rs 2,250 crore at the time) to be raised by senior unsecured bonds through its Hong Kong branch and the second tranche of $500 mn in August 2012 (this latter tranche was subscribed 10 times).

In 2011-12, deposits at its branches abroad were Rs 6,215 crore, up 28 per cent compared to 2010-11, and advances were up 48 per cent to Rs 15,660 crore from Rs 10,563 crore, according to its annual report. It has planned to expand operations, identifying 14 prospective countries. The geographical assessment of these proposed centres was done by Deloitte Touche Tohmatsu India Pvt Ltd.

The consultant had recommended it start with Kenya, South Africa, Australia and the USA, among others, said the annual report.

The bank is also awaiting Reserve Bank approval for opening another branch at Bangkok, for upgrading its representative offices at Dubai and Guangzhou, and a full licence for its Singapore branch.

At the end of this March, the bank had two branches in Hong Kong and one each in Singapore, Seoul, Colombo and Bangkok. Representative offices are at China, Vietnam, Malaysia and the United Arab Emirates. Remittance centres operate at Boonlay and Serangoon, Singapore, and an extension counter is located in Sri Lanka.

To address the need for standardisation, it has decided to bring all foreign branches under a common software platform, with a hub at Singapore and a disaster recovery site at Bangkok.

First Published: Fri, September 07 2012. 00:26 IST